The wave analysis of the 4-hour chart for the euro/dollar pair has become more complicated. Over the past year, we have seen only three wave structures that constantly alternate with each other. At the moment, the construction of another three-wave structure is underway – a downward one. The assumed wave 1 is complete, but wave 2 or b is becoming more complicated for the third or fourth time. Although the news background cannot be considered supportive only of the European currency, the market consistently finds new reasons to increase demand for the pair. In my opinion, such a situation is not normal. Even if the upward trend segment is resumed, its internal structure will be unreadable. Many internal waves will need to be sought, not just marked, to adjust the wave analysis to what is happening in the market.
Unfortunately, the presumed wave 2 or b has become more complicated. I warned that this was possible since the market interprets almost all news favoring the euro. The saddest part is that wave 2 or b can now end at any moment, at the most unexpected moment.
The market disregards positive news from the US.
The euro/dollar pair increased by ten basis points on Friday. Frankly, it's both funny and sinful, but that was enough for wave 2 or b to become even more complicated. The saddest part is that today, the dollar had every chance of rising, but once again, it didn't happen. There was no news background in the European Union today, but in the US, several important reports were released that could affect market sentiment. Let's take a look at them.
The Personal Consumption Expenditures Price Index. Somewhat analogous to inflation. Its value for November was 0.1%, with market expectations of 0.2%.
The most important report on orders for durable goods for November – order volumes grew by 5.4% instead of the expected 2.2%. And how much did the dollar rise after this report? Not at all.
Personal income and spending in the United States – almost completely coincided with market expectations, and the reports are unimportant.
University of Michigan Consumer Sentiment Index – a value of 69.7 with expectations of 69.4. The dollar gained 25 points.
Of course, if every positive report for the dollar allows it to rise by a maximum of 25 points, what talk can there be about a downward wave? The market refuses to increase demand for the US currency, no matter how positive the news background is. Therefore, the blame lies not with the wave analysis but the market itself. There are substantial reasons to maintain demand for the euro currency, but they are unknown.
Based on the analysis conducted, the construction of a downward wave set continues. Targets around the level of 1.0463 have been perfectly worked out, and the unsuccessful attempt to break through this level indicated a transition to the construction of a corrective wave. Wave 2 or b has taken on a completed form, so in the near future, I expect the construction of an impulsive downward wave 3 or c with a significant decline in the pair. I still expect a decline with targets located below the low of wave 1 or a. An unsuccessful attempt to break the 38.2% level may indicate the market's readiness for sales.
On the larger wave scale, it can be seen that the construction of corrective wave 2 or b continues, which, in length, is already more than 61.8% from the first wave, according to Fibonacci. As I have already said, this is not critical, and the scenario with the construction of wave 3 or c and a decline in the pair below the 4-figure mark remains valid.